AT&T has set its sights on becoming the largest GSM network in the US and it’s taking the steps to do so.? AT&T announced that they are in the mix for buying T-Mobile USA for an estimated $39 billion dollars ($24 B in cash and $15 B in stock – about 8% of the company).
The ramifications for this deal is quite large.? While it might seem like just another competitor buying out its competition, I imagine this deal to be the gunshot that starts the war in the mobile market.
T-Mobile, owned by Deutsche Telekom, has had a rough time competing with the mobile giants of Verizon and AT&T, so the sale is not as much of a surprise as one may imagine.? Currently, there are now 3 major mobile players in the USA; Verizon, Sprint and AT&T.? Assuming the deal goes through, AT&T will be the only GSM provider (the type of cellphone chip inside your mobile devices) while Verizon and Sprint will be the only CDMA options.
When deciding between the GSM and CDMA choices, GSM offers you the ability to browse the internet and talk on the phone at the same time, but Verizon has said they are looking to move to an SDMA interface very soon to have the same features.? Verizon has better rated customer service and better rated network coverage, so this move for AT&T was just to increase the fire power and expand their network by 130 million users.
I envision this deal to trigger a response from Sprint.? I fully believe they will almost ask Verizon to take them under their wing and become an entity or sub group under their network.? They already will have trouble competing against the mobile giant that now has the most popular smartphone (iPhone), and will no longer be able to turn quarterly profits which will slowly lead to their demise.
With only 2 options left for mobile service, you’ll have a chaotic mess of price wars.? While this would not be considered a monopoly situation, the price wars might actually hurt the consumer with each provider possibly making it MORE complicated to choose their bundled home phone, internet and TV options if you opt in for their cell plans.
The interesting factor in this deal will be how AT&T changes their LTE plans and market strategy.? Both Verizon and AT&T are moving towards the newer and faster LTE network, and the acquisition? of T-Mobile may accelerate the process.